Item 5 – Fees and Compensation
Compensation and fees for individually managed accounts
Our compensation for individually managed accounts is specified in our agreement with the
relevant client. We charge fixed rate fees that we determine on a case-by-case basis after taking
into account a variety of factors, such as the amount of client assets we have agreed to manage, and
the variety and complexity of the services we are providing Legacy clients pay the asset-based
strategy fee that is specified in their client agreements with us. Our fees are potentially subject to
negotiation.
General Compensation Provisions
Generally, NorthCoast charges management fees on a quarterly basis in arrears as provided in the
investment advisory agreement. The fees are based on the net assets in the client's account as of the
last business day of each calendar quarter. For purposes of calculating each such management fee,
the net assets in a client's account are determined before reduction of the management fee and
accruedor payable as of the calculation date and before any additions or withdrawals. Cash, accrued
interest and the value of securities purchased on margin are included for billing purposes, unless
the Firm determines otherwise, in its discretion.
If a client withdraws all or part of its funds under management, or the agreement with us is
terminated on any other date than the last business day of a calendar month or quarter, that client
will be charged a management fee which will be prorated. The proration will be based on (a) the
number of days in the calendar month or quarter through the date of termination to (b) the total
number of days in the calendar month or quarter.
If a client enters into an agreement with us mid-quarter, that client will be charged a management
fee which will be prorated. The proration will be based on (a) the number of days remaining in the
calendar month or quarter to (b) the total number of days in the calendar month or quarter.
For certain legacy clients, we charge asset-based strategy fees. We charge a higher rate for client
assets invested in some strategies than we do for others. Charging a different rate for client
investments based on the strategy the client is invested in gives us an incentive to allocate client
assets to strategies where we receive higher fees. We mitigate this conflict by disclosing it to you
and by adhering to our duty to recommend strategies that are in the best interests of our clients. In
addition, we will not change the allocation of your portfolio to a strategy that increases your fees
without obtaining your consent.
NorthCoast also manages accounts that are part of “wrap fee” programs (in which the advisory fee
is inclusive of portfolio trading costs) sponsored by other brokerage or asset management firms
with whom NorthCoast has selling agreements or dual contracts. NorthCoast may opt to negotiate
lower fees in order to participate in these programs. NorthCoast does not sponsor its own wrap fee
program. If needed, NorthCoast has the ability to place orders with brokers or dealers other than the
wrap program’s sponsor (“trading away”). In these instances, brokers or dealers will impose mark-
ups/mark-downs on those orders that are charged to the client’s account within the execution price.
These are not included in the wrap fees paid by the client to the wrap program’s sponsor. This
would occur in rarecases in which the additional cost to the client remains consistent with
NorthCoast’s duty to seek best execution.
NorthCoast Asset Management Disclosure Brochure
NorthCoast bills on an “in arrears” basis. However, several brokerage firms offering our products
bill on a forward basis. They include UBS, Pershing, Raymond James, and Oppenheimer.
We offer clients the option of obtaining certain financial solutions from unaffiliated third-party
financial institutions through UPTIQ Treasury & Credit Solutions, LLC (together with UPTIQ, Inc.
and its affiliates, “UPTIQ”). Focus Financial Partners, LLC (“Focus”) is a minority investor in
UPTIQ, Inc. UPTIQ is compensated by sharing in the revenue earned by such third-party financial
institutions for serving our clients. The revenue paid to UPTIQ also benefits UPTIQ, Inc.’s
investors, including Focus, our parent company. When legally permissible, UPTIQ also shares a
portion of this earned revenue with our affiliate, Focus Solutions Holdings, LLC (“FSH”). For
securities-backed lines of credit (“SBLOCs”) made to our clients, UPTIQ will share with FSH up
to 75% of all revenue it receives from such third-party financial institutions. For other loans (except
residential mortgage loans) made to our clients, UPTIQ will share with FSH up to 25% of all
revenue it receives from such third-party financial institutions. For cash management products and
services provided to our clients, UPTIQ will share with FSH up to 33% of all revenue it receives
from the third-party financial institutions and other intermediaries that provide administrative and
settlement services in connection with this program. Although the amount of these revenue-sharing
payments to FSH is not charged directly in the calculation of the interest rate paid by clients on
credit solutions facilitated by UPTIQ or the yield earned by clients on cash management solutions
facilitated by UPTIQ, the compensation earned by UPTIQ is an expense of the third-party financial
institutions that informs the interest rate paid by clients on credit solutions and the yield earned by
clients on cash management solutions. FSH distributes this revenue to us when we are licensed to
receive such revenue (or when no such license is required) and the distribution is not otherwise
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